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STMicroelectronics
Tait Sorensen
Group Vice President
Investor Relations
June 2013
Some of the statements contained in this release that are not historical facts are statements of future expectations and other forward-looking statements (within the meaning of Section 27A of the Securities Act of 1933 or Section 21E of the Securities Exchange Act of 1934, each as amended) that are based on management’s current views and assumptions, and are conditioned
upon and also involve known and unknown risks and uncertainties that could cause actual results, performance or events to differ materially from those anticipated by such statements, due
to, among other factors: • uncertain macro-economic and industry trends;
• customer demand and acceptance for the products which we design, manufacture and sell;
• unanticipated events or circumstances which may delay implementation as planned of the recently announced split up of ST-Ericsson as agreed with Ericsson; • our ability to execute the planned reductions in our net operating expenses;
• the loading and the manufacturing performances of our production facilities;
• variations in the foreign exchange markets and, more particularly, in the rate of the U.S. dollar exchange rate as compared to the Euro and the other major currencies we use for our operations;
• the impact of intellectual property (“IP”) claims by our competitors or other third parties, and our ability to obtain required licenses on reasonable terms and conditions;
• restructuring charges and associated cost savings that differ in amount or timing from our estimates; • changes in our overall tax position as a result of changes in tax laws, the outcome of tax audits or changes in international tax treaties which may impact our results of operations as well
as our ability to accurately estimate tax credits, benefits, deductions and provisions and to realize deferred tax assets;
• the outcome of ongoing litigation as well as the impact of any new litigation to which we may become a defendant; • natural events such as severe weather, earthquakes, tsunami, volcano eruptions or other acts of nature, health risks and epidemics in locations where we, our customers or our suppliers
operate;
• changes in economic, social, political or infrastructure conditions in the locations where we, our customers or our suppliers operate including as a result of macro-economic or regional events, military conflict, social unrest or terrorist activities; and
• availability and costs of raw materials, utilities, third-party manufacturing services, or other supplies required by our operations.
Such forward-looking statements are subject to various risks and uncertainties, which may cause actual results and performance of our business to differ materially and adversely from the
forward-looking statements. Certain forward-looking statements can be identified by the use of forward looking terminology, such as “believes,” “expects,” “may,” “are expected to,” “should,”
“would be,” “seeks” or “anticipates” or similar expressions or the negative thereof or other variations thereof or comparable terminology, or by discussions of strategy, plans or intentions.
Some of these risk factors are set forth and are discussed in more detail in “Item 3. Key Information — Risk Factors” included in our Annual Report on Form 20-F for the year ended
December 31, 2012, as filed with the SEC on March 4, 2013. Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those described in this release as anticipated, believed or expected. We do not intend, and do not assume any obligation, to update any industry information or
forward-looking statements set forth in this release to reflect subsequent events or circumstances.
Forward Looking Statements
2
2
• A global semiconductor leader
• The largest European semiconductor company
• 2012 revenues of $8.49B(1)
• Approximately 48,000 employees worldwide(1)
• Approximately 11,500(1) people working in R&D
• 12 manufacturing sites
• Listed on New York Stock Exchange, Euronext Paris and Borsa Italiana, Milano
Who We Are 3 3
(1) As of December 31, 2012, including ST-Ericsson, a 50:50 joint venture with Ericsson
OUR VISION
Everywhere
microelectronics
make a positive
contribution
to people’s lives,
there is ST
OUR STRATEGY
Leadership in Sense &
Power, Automotive
Products
and Embedded
Processing Solutions
ST’s vision
and strategy 4
OUR 5
GROWTH
DRIVERS
Smart Power
Automotive Application
Processors &
Digital
Consumer
Microcontrollers
MEMS and
Sensors
Product Segments
Digital
Convergence
Group
(DCG)
Imaging,
BiCMOS ASIC
& Silicon
Photonics
(IBP)
Automotive
Product
Group
(APG)
Analog, MEMS
& Sensors
(AMS)
Microcontroller,
Memory &
Secure MCU
(MMS)
Embedded Processing Solutions
(EPS)
Industrial &
Power Discrete
(IPD)
Sense & Power and Automotive Products
(SPA)
Wireless
(WPS)
ST-Ericsson*
50:50 JV with Ericsson
*Exit to be completed by 3Q 2013
5
6 S
ense &
Pow
er
and A
uto
motive P
roducts
(SP
A)
Em
bedded P
rocessin
g S
olu
tio
ns
(EP
S)
1Q13 Revenues by Product Groups
11%
15%
4%
13%
22%
19%
16%
Automotive
Product Group
(APG)
Microcontroller,
Memory & Secure
MCU (MMS)
Wireless
(WPS)
Analog, MEMS
& Sensors
(AMS)
Digital
Convergence
Group (DCG)
Imaging, BiCMOS
ASIC & Silicon
Photonics (IBP)
Industrial &
Power Discrete (IPD)
SPA EPS
Financial Performance 7
In US$M, except EPS 1Q12 2Q12 3Q12 4Q12 1Q13 FY11 FY12
Net Revenues 2,017 2,148 2,166 2,162 2,009 9,735 8,493
Gross Margin 29.6% 34.3% 34.8% 32.3% 31.3% 36.7% 32.8%
Operating Income (Loss) before impairment,
restructuring & one-time items*
Operating Margin before impairment, restructuring
& one-time items attributable to ST*
(280)
(6.5%)
(151)
(1.3%)
(79)
0.3%
(142)
(3.3%)
(180)
(5.3%)
121
6%
(652)
(6.5%)
Net Income – Reported (176) (75) (478) (428) (171) 650 (1,158)
EPS Diluted
Adjusted EPS Diluted*
(0.20)
(0.14)
(0.08)
(0.05)
(0.54)
(0.03)
(0.48)
(0.11)
(0.19)
(0.13)
0.72
0.41
(1.31)
(0.33)
Free Cash Flow*
Net Financial Position, adjusted for 50%
investment in ST-Ericsson*
98
1,267
(129)
1,153
(80)
1,064
145
1,192
(65)
1,096
(288)
1,167
33
1,192
Effective Exchange Rate €/$ 1.33 1.32 1.29 1.30 1.31 1.37 1.31
*See appendix
ST-Ericsson Split Up 8
STMicroelectronics
Existing ST-Ericsson products*
and related business as well as
certain assembly and test facilities
• About 950 employees
• Main sites: France and Italy
• ST financially responsible
from March 2, 2013
• About 1,600 employees and
contractors
• Agreement to sell GNSS
connectivity business
estimated to reduce JV cash
needs by about $90 million
• Joint financial responsibility
from March 2, 2013
• About 1,800 employees and
contractors
• Main sites: Sweden, Germany,
India and China
• Ericsson financially
responsible from
March 2, 2013
*Other than LTE multimode thin modem
Formal transfer of the parts of ST-Ericsson to the parents expected
to be completed during 3Q13, subject to regulatory approvals
Ericsson
Design, development and sales of
the LTE multimode thin modem
products
ST-Ericsson
Starting the close down of the
remaining parts of the JV
ST Financial Model* 9
Targeting 10% or more operating margin
Net operating expenses average quarterly rate
in the range of $600 million to $650 million**
*Based on an average effective exchange rate of 1.30 Euro/dollar
**By the beginning of 2014; excluding restructuring charges
9
Three-axis Plan to Achieve Financial Model 10
Revenue Expansion
Key growth drivers
Innovation
Market share gains
Gross Margin Expansion
Improved product mix
Manufacturing optimization
Opex Reduction
Opex optimization plan
Strengthening ST’s Net Financial Position
Key Industry Trends
Smart energy
usage
Embedded
intelligence
11
Our Growth Drivers 12
Smart Power Automotive
Application
Processors
and Digital
Consumer
Microcontrollers MEMS and
Sensors
Targeting Areas Where ST Leads 13
Smart Power Automotive
Application
Processors
and Digital
Consumer
Microcontrollers MEMS and
Sensors
#1
MEMS
#2
Industrial
Electronics
#3
Automotive
#4
MCU,
excluding
Automotive
#2
Set-Top Box
2012 ST Rankings*
*IHS iSuppli,
• Semiconductor market expected to improve in 2013
• ST, excluding ST-Ericsson, expects to outperform the serviceable available market
(SAM) in 2013 • Outperformance driven by: sales organization, mass market and new products
US$B
0
3
6
9
12
FY09 FY10 FY11 FY12
ST ex ST-Ericsson ST-Ericsson
ST Revenue Dynamics
Highest contributors to 2013
revenue performance
• Imaging
• Microcontrollers
• Analog & MEMS
• Power Discrete
14 14
ST Quarterly Revenues 15
1.0
1.2
1.4
1.6
1.8
2.0
2.2
2.4
1Q12 2Q12 3Q12 4Q12 1Q13 2Q13e
Actual Guidance
US$B
1Q13 Revenues = $2.01B -0.4% vs 1Q12
• 1Q13 Revenues excluding Wireless Product Line: • Up 1.3% y-o-y
• Down 3.4% q-o-q, better than seasonal
• Wireless Product Line down 26% q-o-q
• 2Q13 Revenue Guidance: • Up about 3% q-o-q (+/- 3.5 percentage points)
• Up about 7% q-o-q at mid-point excluding Wireless
Product Line
15
Addressing the Mass Market
18%
20%
22%
24%
26%
1Q12 2Q12 3Q12 4Q12 1Q13
Distribution
(as % of total revenues)
*Listed alphabetically
16
New Sales & Marketing Organization
• Global account responsibility
• Continued focus on new major accounts
• Increased geographical customer and distribution
branch coverage
• Revenues from distribution
• Up 18.7% y-o-y
• Up 3.5% q-o-q
Top Distributors*
Tomen
Wintech
Yosun
Arrow
Avnet
Future
Key marketing initiatives delivering results
Gross Margin Evolution
20%
22%
24%
26%
28%
30%
32%
34%
36%
38%
1Q12 2Q12 3Q12 4Q12 1Q13 2Q13e
Gross Margin - Reported Unused Capacity
Arbitration Award Guidance
17
• 1Q13 gross margin down 100 basis points q-o-q,
• mainly driven by no revenues from licensing and
usual beginning of the year price pressure.
• On a y-o-y basis gross margin was up 170 basis
points.
• 2Q13 expected q-o-q improvement driven by increased
volumes, reduced unused capacity charges and improved
manufacturing efficiencies as fab utilization rates are
expected to be ~85%
• Product mix evolution toward higher margin products
• ST-Ericsson business decrease; currently significantly dilutive
to ST consolidated gross margin
• Manufacturing optimization towards utilization rate of about
90% and loading stability.
Key drivers for gross margin expansion
ST Operating Expenses Evolution 18
Resizing ST’s Cost Base
Significantly reducing operating costs
Combined 1Q13 SG&A and R&D:
• Down $131M y-o-y
• Down $64M q-o-q
0
200
400
600
800
1,000
1Q12 2Q12 3Q12 4Q12 1Q13 2Q13e
R&D SG&A
US$M
Announcement to exit ST-Ericsson
A significant step towards our quarterly net
operating expenses goal of $600-$650M
Reaching our Quarterly Expense Target 19
ST 1Q13 NetOpex
ST-EricssonExit
October 2012Digital Plan
Others Support toTechnology
R&D
ST QuarterlyNet Opex
Target
Steps to Achieve Net Operating Expense
Target of $600-$650M
$808M
All ST organizations will
contribute to achieve a $35M
quarterly expense reduction
target, especially Embedded
Processing Solutions and Staff
and Support Functions
The Right Model for Our Industry 20
Advanced
Technology R&D
& Innovation
Application-targeted
process & package
development
Optimized in-house
manufacturing
processes
Collaborative
Technology R&D ISDA, Foundry
Partners
Flexible
manufacturing Foundry Partners
OSAT partners
Simplicity
Cost, Quality
Figures of Merit
Design Legacy
Supply security
ISDA: International Semiconductor Development Alliance
OSAT: Outsourced Assembly and Test
Scalability
Time to market
Technology Portfolio Enabling Business 21 S
ense &
Pow
er
and A
uto
motive P
roducts
Em
bedded P
rocessin
g S
olu
tio
ns
Packaging
Automotive
Products Group
Analog, MEMS
& Sensors
Industrial &
Power Discrete
Microcontrollers,
Memory &
Security
Digital
Convergence
Group
Imaging, BiCMOS
ASIC & Silicon
Photonics
Process
Advanced
CMOS
FD-SOI
Power &
Discrete
Analog Mixed
Signal/RF
eNVM
BCD
MEMS
BiCMOS
CMOS
Image
Sensor
Manufacturing Model 22
Front-End
Back-End
Morocco
France (Crolles, Rousset, Tours)
Italy (Agrate, Catania)
Malaysia
Singapore
Philippines
China (Shenzhen
/ Longgang)
Malta
• Manufacturing model unchanged
• Independent manufacturing
• Supply flexibility provided by foundries
• Efficient manufacturing tool at about
$2.2B-$2.3B quarter run rate
• 6 Front-end sites
• 20% outsourcing target
• 6 Back-end plants
• 30% outsourcing target
Manufacturing & Technology R&D CAPEX 23
• Proven ability to significantly modulate Capex
• Essentially driven by decisions to add global capacity on
top of technology mix evolution
• 2013 Capex expected to be approximately $550M-$600M
• 300mm 14nm FD-SOI capability
• 300mm Image Sensor BSI capacity
• MEMS
• Smart-Power mix change
• Capacity increase & mix evolution in back-end
• Copper wire conversion
0
500
1000
1500
2009 2010 2011 2012 2013e
Capex in US$M
Front-End R&D Test&Others Back-End
Expected Capex 2013
Net Financial Position* End of period (US$M) Mar. 30, 2013 Dec. 31, 2012 Mar. 31, 2012
Available Cash and Marketable Securities 1,906 2,489 2,213
Restricted Cash 4 4 7
Total Liquidity 1,910 2,493 2,220
Total Financial Debt (897) (1,301) (1,442)
Net Financial Position 1,013 1,192 778
ST-Ericsson Net Debt to Ericsson 83 - 489
ST Net Financial Position 1,096 1,192 1,267
*See appendix
Maintain Strong Financial Position
• In 1Q13, ST:
• Repaid $455M at maturity of outstanding 2013 Senior bonds
• Funded $83M under the ST-Ericsson parent facility
• Funded capex of $111M
• Signed new €350M European Investment Bank loan
• In first half of 2013, ST’s capex expected to be about $300M
• Significantly below 10% of revenues
24
Dividend Evolution
$0.00
$0.02
$0.04
$0.06
$0.08
$0.10
$0.12
2010 2011 2012 2013*
1Q
2Q
3Q
4Q
• Quarterly dividend distribution to
be decided semi-annually instead
of annually
• US$0.10 in 2Q and 3Q of 2013, per
common share, to be paid in June
and September of 2013, respectively
• 4Q 2013 and 1Q 2014 dividends will
be decided at a Shareholders’
Meeting to be held during the fourth
quarter of 2013
*2Q13 and 3Q13 dividend as submitted to the 2013 Annual General Meeting
25
Why ST will Win
Industry leading silicon process and packaging technologies
World-class manufacturing & supply chain
Focused go-to-market with leading positions
Complete system / application knowledge and integration capabilities
26
People
Appendix 27
Appendix • Free cash flow is defined as net cash from operating activities minus net cash from (used in) investing activities, excluding proceeds from the sale of marketable securities. We
believe free cash flow provides useful information for investors and management because it measures our capacity to generate cash from our operating and investing activities to
sustain our operating activities. Free cash flow is not a U.S. GAAP measure and does not represent total cash flow since it does not include the cash flows generated by or used in
financing activities. In addition, our definition of free cash flow may differ from definitions used by other companies.
• Net financial position: resources (debt), represents the balance between our total financial resources and our total financial debt. Our total financial resources include cash and cash equivalents, marketable securities, short-term deposits and restricted cash, and our total financial debt includes short term borrowings, current portion of long-term debt and long-term
debt, all as reported in our consolidated balance sheet. We believe our net financial position provides useful information for investors because it gives evidence of our global position
either in terms of net indebtedness or net cash position by measuring our capital resources based on cash, cash equivalents and marketable securities and the total level of our financial indebtedness. Net financial position is not a U.S. GAAP measure.
• Operating income before impairment, restructuring and one time item excludes impairment, restructuring charges and other related closure costs and NXP Arbitration award.
• Operating income before impairment, restructuring and one-time item attributable to ST is calculated as operating income before impairment, restructuring and one time item excluding 50% of ST-Ericsson operating loss before impairment and restructuring as consolidated by ST. Operating margin before impairment restructuring and one time item
attributable to ST is calculated as operating income before impairment, restructuring and one time item attributable to ST divided by reported revenues excluding 50% of ST-Ericsson
revenues as consolidated by ST
• Adjusted net earnings and earnings per share (EPS) are used by our management to help enhance an understanding of ongoing operations and to communicate the impact of the excluded items like impairment, restructuring charges and other related closure costs attributable to ST, and one-time items, net of the relevant tax impact.
• Consolidation of ST-Ericsson: ST-Ericsson, a joint venture owned 50% by ST, began operations on February 3, 2009 and is consolidated into ST’s operating results as of that date. ST-Ericsson is led by a development and marketing company consolidated by ST. A separate platform design company providing platform designs mostly to the development and
marketing company is accounted for by ST using the equity method.
• Wireless Segment: As of February 3, 2009, “Wireless” includes the portion of sales and operating results of the 50/50 ST-Ericsson joint venture as consolidated in the Company’s
revenues and operating results, as well as other items affecting operating results related to the wireless business.
• Sales recorded by ST-Ericsson and consolidated by ST are included in OEM and Distribution
28
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